tv Bloomberg Markets Americas Bloomberg May 29, 2017 10:00am-11:01am EDT
markets. the top stories. ecb president mario draghi speaking to european parliament. the central bank is firmly convinced the euro area needs support. giving herel strongest confirmation yet that the europe and donald trump are drifting apart. airways shifts to recovery mode after a computer error led to a crisis over the weekend. crisis putting the spotlight on chief executive alex cruz.
trading in london, in the u.s., no trading in china. let's start with stocks. 600 has a little bit of a change. the average volume which tells us what sort of trading conditions we are seeing. below the time of this day that we normally see. down oncurrencies are the day. a little bit of support earlier after comments from the fed hike. williams said that hikes are to be expected. let's move on to the currency board.
here is the dollar rising against the ran today. that the south african president is staying put. muted reaction for the ran suggesting that investors still find the yield tempting enough. market, -- renzi will hold an election in the autumn. the market is uncertain about italy. they could show the strongest economic confidence in a decade. opec last week is seemingly underwhelming investors with its extension deal.
the global stockpiles will drop faster in the next quarter. the u.s. production data. we have rigged data on friday showing that explores added rigs yesterday. the highest level since 2015. gold is at the highest level in a month. president trump is back in washington after his first overseas trip. here is what he said at the conclusion. >> we have been gone for close to nine days. i think we hit a home run no matter where we are. mark: foreign-policy concerns remain as north korea launches another ballistic missile. bill ferris.n
it was a bit of a slap in the making this test just a couple days after the g7 made a pledge. >> sure, kim's regime has a penchant for launching missiles at inconvenient times that put other leaders in uncomfortable positions. after ther the g7, u.s. gets ready to celebrate memorial day, we have another test. president trump responded briefly on twitter emphasizing that he thinks this was an insult to china. he is counting on china to do more to rein in the north korean regime. mark: he calls it a home run. what does everyone think at home? bill: at home, there was a lot of unusual imagery. there was the glowing orb in
saudi arabia, him pushing past one of his european allies at the nato photo. i don't know that the substance of the trip made a lot of news in the united states. the administration will tout trying to bring together arab allies and israel to rein in iran. trump's base of support will be happy to see he did not sign on to the european plan on climate change. that he is rethinking his policy on that. domestically, i don't think he had any big missteps. european leaders, based on the comments from angela merkel and others, they got their first taste of what trump's america first policy is all about. mark: angela merkel suggesting that the europe and the u.s. are drifting apart and that europe
must plot its own course. were these watershed moments? bill: i think it is a reflection of reality. the year ago it was a different situation. anil trump was seen as not having a great chance to win. having as seen as not great chance of passing. it is not just the u.s. that merkel is responding to. it is in england and elsewhere.t the terms of global trade. the role for the u.s. and these additional alliances. mark: trump comes back to a lot of press attention on his son-in-law, jared kushner. it has been revealed that he considered setting up a secret back channel to russia. where is the story heading? bill: the russia scandal from the white house went of you is
not going away. trip, it left on this was in the aftermath of the firing of the fbi chief. reports that trump may have leaked intelligence to russian officials in the white house. while there, we learned that jared kushner is someone that the fbi is looking at in terms of his connections with russia. this is a big week with trump. issue, whichshner brings russia into the oval office. he has to find a new fbi director. he has to decide what he is doing with the paris climate accord. the best news for the president and the white house is that congress is out of session. there are no big hearings that will generate more news for th white house this week. the president has a lot to get through. mark: i will tell you who has a
lot to get through on today's airlines, specifically iag. they had a lot of technology issues causing huge disruptions in the u.k.. the homeland security secretary, john kelly, saying that he may ban laptop computers in cabins of all international flights. bill: it would be a huge inconvenience and airports and travelers at airlines. u.s. is a threat that the is trying to figure out how to respond to. a few months ago they introduced this laptop been for about 10 airports, but the fact that they are considering expanding it to europe means that they see something very serious. holdup isow what the if it is that imminent threat, but it will be a big
inconvenience for a lot of people. usk: bill ferris telling everything that you did to know about trump on this holiday. taylor riggs has more in new york. france -- vladimir putin is in france. told australian television that it is the russians who just -- we tried to destroy the fundamentals of democracy by interfering in the u.s. election and the recent one in france. arrest placed on the south coast of england hundreds of miles south of manchester. the suspects have been charged or identified. north korea is testfired another ballistic missile. it is the ninth rocket test this
year. south korea says that it flew 280 miles towards japan. president trump reacted on twitter saying that the north korean missile test shows great disrespect for its neighbor, china. british airways is in recovery mode after the weekend fiasco left hundreds of travelers stranded. is still processing thousands of passengers who missed flights or lost luggage. denied thethe ceo, problems were related to cost cuts. he told bloomberg 75,000 passengers were affected. by 2400g news powered journalists and analysts in more than 100 countries. overseassident trump's could lead to more
mark: the implications of president trump's first international trip extending beyond washington. mark mobius talked to bloomberg markets: asia about what he thinks is in store about the overseas deals. >> i am optimistic because i think the deal in saudi arabia is just the beginning. i think he will probably do a deal with the chinese to engender more deals in the u.s..
and around the world where you get more exports from the u.s. and more investments in other parts of the world. even if he doesn't get to the 3%, emerging markets are still growing at 4% plus. the biggest countries, china and india are growing at 6% or 7%. buta may go down to 5%, even 5% is a huge increase. you said the prospects in vietnam are amazing. which sectors are you liking? >> we like the consumer-oriented companies. fast foods. that is one area that is very exciting in vietnam. new concepts, new distribution. and logistics. getting products to consumers. if you look at certain areas in the construction area, because
they will have to do a lot more infrastructure spending, that would be interesting as well. >> their risk, president trump hasn't vietnam among countries he considers trade cheats. a $32 billion trade surplus with the u.s. should trump impose a tariff it will be detrimental. >> i doubt that will happen. i think strategic considerations are more important. vietnam is a key country in that part of the world. if the u.s. wants to keep the child -- south china sea lanes open, they need vietnam. staterrent secretary of was doing deals with vietnam, drilling offshore. the relationship is going to be strong. >> how much more upside do you see? >> 20% to 40%?
within the year. quite possible. that is anybody's guess. about theo talk french l5, but when you look at the asian countries within the french l5, they are looking pretty good. indonesia. >> despite all of these problems with terrorism, the index keeps climbing. the economic picture looks so good. their leader is doing the right job, trying to get the industry going. >> too slow for indonesia. >> it met -- it depends what you think. -- what you have to rubber is at the national level you don't see much, -- you have to remember is at the national level, you do not see much.
but at the provincial level you're seeing it. it may not make big news at the national level. you can see the same thing in india. you will see this distribution of wealth to the various states in india. >> what would it take for indonesia to see more upside? that they had their credit rating updated, but that is a done deal. what would it take for indonesia to make a jump and to be a darling for investors? >> i think it would have to be at the religious level. a decline in religious extremism would be a big signal. whether they are christian, islamic, or whatever, this would be a big step for the country. even without that, cut down on corruption. mobius speaking to
bloomberg in singapore. time for the bloomberg business flash. a billionaire, warren buffett, has taken a 3% stake in the german chemical company. he disclose the investments in a filing to the. their shares rose today. they said that the company expected growth to slow in the second half of the year. a new microchip design aimed at cracking intel's stronghold on the personal computer and server markets. the company says the new chip would increase performance by 50%. it's predecessor is at the heart of many of the world's smartphones. ararm is a division of softbank.
msci is expected to decide next month whether to put saudi arabia on its review list. saysonaire lawrence hose when it comes to building a --ino in japan, it chooses over tokyo. lawmakers voted to open the country to casino gambling. >> i am not so sure. i have been to tokyo 200 times. i'm not sure that talk -- that tokyo needs an integrated resort. tokyo by itself is amazing. when people ask if new york or london needs an integrated resort, ia am like, no. the place where you do build them, places like las vegas, macau, places where you go to have fun. mark: others competing for japanese gambling lysis --
mark: this is bloomberg markets. mario draghi defending central-bank's decision to continue monetary support in the face of pressure to begin withdrawing stimulus. here is what he said earlier in his prepared marks. >> overall, we remain extraordinarily convinced that an amount of monetary support, including our former guidance, is still necessary for the
present level of underutilized resources to be reabsorbed and dor inflation to return to an -- to around 2% within a meaningful medium-term horizon. mark: draghi is taking questions. >> including the enhanced supervision at eu levels and location requirements. you, thultimately be to e eu legislator to decide which to apply to third countries. crucialecb, it will be that it can at least preserve the current level of involvement over systemically important, euro-denominated clearing activities.
regardless of the foot -- of the framework adopted by the legislator in the terms of the future e.u. legislation. it is difficult for us to determine the final contract -- construct. at the very least, we want to preserve the current degree of involvement. we had to have proper tools under the eu law to ensure we can produce -- preserve the stability of the currency in the face of potential risks created -- we welcome the communication and that communication fully technologies the role that the bank of issue has to play in this new environment. thank you. chair,k you very much,
for being with us again. i would like to talk about the future. doubt, if you look at the recent comments by angela longer trustn no people outside. we have to look inside. in france, people have said, we need to see significant reforms to the eurozone. some countries may be happy to see more fiscal integration. more parliamentary supervision as well. i would like an assessment from you on the proposal and whether you think it would work. in -- futurevision supervisions in europe.
whether the agencies were meeting expectations or the objectives they had said. i would like to know what you think the future may be there. mark: bloomberg.com -- being asked aaghi long question there. it is a quarterly session. you can continue to watch his comments at tvgo. still ahead, more on draghi's inflation dilemma. this is bloomberg. ♪
york. thatr: angela merkel says germany and the u.s. must remain partners despite their differences. she signaled that in the donald trump era, europe must shape its own destiny. donald trump called germany's trade surplus very bad and blasted nato allies for not spending enough on defense. president trump has said he will decide this week whether to pull the u.s. out of that landmark paris accord. the u.s. took the unprecedented step of breaking with the other six nations saying that america is reviewing its climate policies. presidentfrica, the has survived an attempt by some south african leaders to remove him from office. according to the executive committee them of the panel decided not to vote on a no confidence measure. has been more pressure on him to quit since march.
francisco, the fed president expects the central bank to have a much smaller balance sheet in five years. view of theown economy, i would expect us to start normalization of the balance sheet toward later this year. it will take several years to take place. allow the assets we have to mature and decline organically. policymakers come up with a plan to reduce the $4 trillion in assets. i am taylor riggs, this is bloomberg. mark: mario draghi is taking questions right now.
he says he still needs exceptional support to restore slack and stabilize inflation. i want to bring in the chief economist. he joins me from berlin. he does not seem to be a man in a hurry to take his foot off the monetary easing gas. >> definitely not. i think that was his main message. he kept his cards close to his chest. at the same time, he sounded actually dovish. making it clear that if there are any tweaks they will only be words. there is no announcement of tapering and forget about rate hikes. so the risks are now
balanced? the risks and outlooks are balanced. the ecb has been and will continue to follow a gradual path. risks is time to call the to the economic outlook balanced. at the same time, inflation will probably drop again and as linchpinld us, the new in the monetary policymaking are wages. pickup oft seen any wages. i think there is no need for the the brakes. back?what is holding us >> i think it is the outlook gap. it is the damage that has been done to the labor market and the eurozone. if you take a country like
germany, going into the ninth year of economic recovery with record high employment, even here wages are only increasing by 2% to 3%. there is so much downward pressure on wages that it could take years before we see a significant pickup. mark: let's look at our whichful function, eu go gives us everything we need to know about what is happening. you have all sorts of metrics telling us about how each nation is sparing. are you comfortable with what is proving to be a durable and resilient economy? >> i am happy with the current state of the eurozone recovery. we have growth in all countries except greece. it is broadly spread. it looks doable. it means once the political
risks were overdone and now they have faded away. the eurozone could become the big cyclical surprise. the structural reforms need to be done. the eurozone news to get growth to a structurally higher level. mark: coming back to the issue of inflation. datae getting inflation this week and headline and court inflation will not be as strong as the prior reading. greatright, i have a chart, draghi's preferred inflation gauge. in july of last year, it was at a record low. we have come off those lows, but we are still at 1.6% which tells
us that investors do not have much confidence. the ability to engender some sort of inflation. do you have confidence that the ecb can push inflation to just under its target range? >> i do have confidence, but it is not all the task of the ecb.. we have governments needing to improve structural reforms to get structural growth to a higher level. we have globalization and digitalization. two your missed factors for policymakers which are inserting downward pressure on price and on wages. i'm still confident that the ecb can reach it. that will be a long path. mark: we will come back to you in a second. carsten bresky will stay with us. we are going to take it deeper
merkel's pledge and views that we are all trans atlanticis ts, that it is tarnished since the election of trump? >> it has become more difficult after the trump administration has criticized the eu based on trade and nato but let's not forget that the relationship is a long-standing relationship. germany needs the u.s. as much as the u.s. needs germany. mark: merkel was singing the merits of the eu saying we have overcome the dutch election and the french election and it seemed to be a call to arms for the project. can merkel and the likes of mccrone make the next step when it comes to key issues like -- make the next step when
it comes to key issues like immigration? >> if they're unable to make these hopes and promises come true, then in four or five years from now, the chances are high that we might see populists taking over the government which means that we have this window of opportunity right now. we have this chance to work together and to push forward with the reforms, not only for europe, but it would the important for the union to deepen integration at the eurozone level. mark: a man will mccrone -- emmanuel macron has a number of suggestions. compromise when it comes to this macron-merkel relationship. clearly germany needs to make
that step but germany will not want to give in too much. what is the compromise when it comes to this vision? compromise will be that macron and the french will have to do their own homework. that is clearly what merkel and berlin have communicated to the french government. get france back on the rails. then they can talk about things like euro bonds and more integration. where is the compromise after the german elections. talking about the eurozone finance minister is a compromise. they are also talking about, not euro bonds, but pro euro bonds. germany right now will come up with clear red lines, especially
for their own electorate. after the german elections, these things will have to change because germany will have to of these or many redlines. >> there is another action taking place on thursday here in the u k. the polls have narrowed showing the cap between the conservatism and labour party is a mere five percentage points. what does it mean when it comes to the brexit negotiations. the does it mean for negotiations between the u.k. and the eu which will start next week? weaker u.k. government means even tougher negotiations.
she would also have to make compromise at home. is the stance that the government has now also the stance will see at the end of june? it is a good chance that a will be atheresa may more difficult partner. a weakened theresa may also means new negotiations within the british government. let's not forget. so far there have not been any talks at all between the eu and the u.k. government. mark: thank you for joining us. carlson bresky. time for the bloomberg business flash. audi has agreed to buy 16 777's.
it goes in line with the plan to expand long-haul routes outside of saudi arabia. with gulf began in 2016 four airbus jets. forcedof steering gears beer though we -- bmw to stop production. the oil market is pessimistic over the opec deal to extend production cuts. new york crude slipping below $50 per barrel. opec agreeing to extend the output curve by nine months. a move seen as the most predictable outcome. time for our bloomberg quick take where we provide context. japan reporting a slight acceleration in cpi. japan's goal of 2% inflation
remains well off in the distance. a look at some of the demographic challenges making it harder for japan to achieve its goals. >> japan is the world's senior citizen. birth rates are falling, and people are living longer. japan has a population that is aging and tricking fast. --. shrinking fast. there encouraging japanese people to have more babies and to bring in more workers0. japan's population is forecast to tumble by about one third between now and the middle of the century if current trends continue. over 64-year-olds, one quarter of the population, are expected to reach 38% by 2028. it is causing a shortage of workers and starving the economy of labor. twookyo, there are
vacancies for every applicant. prime minister shinzo abe is introducing policies to curb excessive working hours and to create care facilities for children and the elderly. but change has been slow. robotideas include abe's revolution, encouraging automation in everything from factories to medical care. his moves to listen labor rules have had some impact. the've helped to double impact. an aging population bring stier fiscal applications -- brings dire fiscal implications. the electoral muscle of the elderly, far more likely to vote, has made it hard for politicians to do more than trim their pensions and other
benefits. while the japanese recognize it is a problem, most are wary of immigration. they want to preserve their unique cultural identity, and a fear of increasing the ultralow crime rate. 647,000eds to attract foreigners per year to maintain its population. with other asian countries aging rapidly, experts say japan may struggle to attract the number of foreigners it needs. you can read more on the bloomberg. many computer systems are running again following a weekend of chaos caused by a massive technology failure. this is bloomberg.
mark: president trump is set to take part in the lighting of the wreath at the tomb of the unknown soldier. this is a long-standing tradition in memorial day. in the meantime, back to business news. british airways is in recovery after they suffered a massive computer failure that left dozens of passengers strip -- stranded. bloomberg'sing in global is this managing editor. he joins us from berlin. we are in recovery mode for british airways. limitationdamage mode. >> the cancellations that we saw today were a trickle compared to
what we saw over the weekend. it was an epic computer system failure that led to hundreds of thousands of people being stranded. the scenes in heathrow that we have seen. ceos scratching their heads a little bit. alex cruz appeared in front of -- he said we think it is a local power failure. there have been a lot of accusations flying back and forth. costs then cut too aggressively? something that could have been avoided? he was sing we will have a robust analysis of what happened but a lot of questions remain unanswered at this point. mark: how much is the weekend breakdown going to cost? >> there are several numbers
floating around out there. of numbers amount that passengers can claim. they might claim something like 300 pounds ahead my maybe north of that. that is a hefty price tag. you add three days of severe disruptions of lost business. some analysts say that is about 30 million pounds per day. this will play into their bottom line, but right now, the company is trying to recover. it is one of the most epic technical meltdowns we have seen from an airline. delta at united. nothing like this where it spilled into several days. you will have misplaced aircraft, crews and luggage.
that is a matter of days going forward. mark: any idea what caused the meltdown? >> a local issue. that is the narrative. a power outage. hard to imagine how a b.a.sticated company like would not have backup systems. a lot of questions remain. we will have much more reporting in the next couple of days. mark: ing shares in madrid declining. business managing editor in london. the first vietnamese company to list in an overseas stock exchange. the carrier controls more than 40% of the domestic airline market. the chief executive and founder spoke to bloomberg in an exclusive interview.
>> we have been approached by some foreign stock exchanges including london, hong kong and singapore which expressed interest in our stock. we don't want to become the first the enemies company to list shares overseas. mark: the chief executive said they are planning to list the ipo to seek more funds with billions of dollars in aircraft purchases. they will be traveling to the u.s. for a meeting with president donald trump. president trump is set to take part in the laying of a wreath at the tomb of the unknown soldier in arlington. this is a long-standing tradition on memorial day in the united states. he will be making comments later which we will take live.
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